What will be Seaworthy total dividends

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Problem - In 2019, Seaworthy Dingy's earnings are expected to be $14.4 million, and the firm expects to have profitable investment opportunities of $8.4 million. Last year, the company paid dividends equal to $9 million. It is predicted that Seaworthy will grow at a constant rate of 5 percent in the future. What will be Seaworthy's total dividends for 2019 if it follows

(a) a policy that requires dividends to grow at the long-run growth rate in earnings and

(b) a pure residual dividend policy. Seaworthy's target debt/assets ratio is 40 percent.

Reference no: EM132698763

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